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Saturday, September 24, 2016

The rich get richer, the rest get poorer

Since the late-1970s, the top one percent of families have
been steadily accumulating a larger share of the nation's wealth (total assets
people own net of their debts), recessions notwithstanding. In 2012 (the most
recent available data), the top one percent of families (1.6 million families,
each with at least $4 million in assets in 2012) held about 42 percent of all
the wealth. Although still below the 1928 peak of 51 percent, the growth has
been spectacular, almost doubling in close to 40 years.

As large as income inequality is, the 42 percent wealth
share held by the top one percent of families far surpasses the 22 percent
income share held by the top one percent in the income distribution.

By contrast, the share of wealth held by the bottom 90
percent (almost 145 million families) has been depleting steadily, falling from
a high of 36.4 percent in 1984 to 22.8 percent in 2012. The income share of the
bottom 90 percent is less, but still severely, skewed, standing at almost 50
percent in 2012.

The rich are entrenching their wealth. The wealthy are
growing their wealth by more than their income as they pull even further away
from the bottom 90 percent. Since 1979, the real average wealth of the top one
percent of families has grown 245 percent -- from 4 million dollars, on
average, to almost 14 million dollars (in 2010 dollars) per family. Over the
same period, the income growth of the top one percent of families, although
impressive, has not been as spectacular, increasing by 178 percent.

The real average wealth of the bottom 90 percent, by
contrast, fell dramatically after the Great Recession, plummeting from the 118
percent growth mark reached in 2006 to a 40 percent increase in 2012. The real
average wealth of the bottom 90 percent of families, which was $60,000 (2010
dollars) in 1979, rose to a peak of $130,000 in 2006, before falling to almost
$84,000 in 2012. Over the same 1979 to 2012 period, the bottom 90 percent of
families also saw their real average incomes decline by 9 percent.

The dramatic increase in wealth inequality is also
illustrated by the stunning growth in the ratio of wealth held by the top one
percent to the bottom 90 percent of families. In 1979 the real average wealth
held by the top one percent was 67 times larger than the bottom 90 percent. By
2012, this ratio had increased to 165 times, while the disparity in real
average income between the top one percent and the bottom 90 percent expanded
from 14-to-1 to 42-to-1.